How to Vet Hard Money Lenders

[Keith Nicholson]

I’m thinking of working with a hard money lender. I’ve looked them up on the BBB website and I can’t locate them. He sent me a website that really doesn’t provide any info. Is there a better way research a lender and what kind of questions should I ask before I get involved?

[Kyle J.]

@Keith Nicholson Good for you for wanting to do your due diligence before actually doing business with them. There are a lot of scammers in this space, especially if this is a company you’ve only communicated with online and have never met in person.

There are a few posts on this topic on BP, but here’s one of the better ones in my opinion (see the response in this thread from Jeff):

Private Money Lender - How to Qualify the Lender?

There’s a great list of questions you can ask the potential lender in Jeff’s response. And don’t skip over the advice about asking the lender what name they lend under and then attempting to verify their prior loans. This is public information and you can usually even do this yourself.

For example, I’ve done private loans before and if a potential borrower wanted to vet me, where I’m at they could simply search my name on the Recorder’s Office website (search recorded documents) in the counties where I’ve done loans before and easily verify this. (You can even figure out who the borrowers were.)

On the other hand, if I told you I did loans under a certain name in a particular county, and that name didn’t appear at all, that should be a red flag.

The process may be slightly different where you’re located, but it still should be public information.

Good luck and keep being diligent.